Ready To Travel?

Your life and your taxes will never be the same. Working as traveler can be an exciting way to see the country and still get paid for the effort. A whole new world of logistics awaits you as well. You’ll learn how to pack more efficiently, navigate new cities, use maps, new area codes, different accents and weather to name a few. I traveled for 3 years, worked in 9 different cities and enjoyed the regional differences that I encountered as well as the different winters (try New Orleans and northern Minnesota!). You will also encounter some headaches: how to get mail forwarded to your assignment, new practice licenses and most of all, the new tax filings that you will have.

What will be different about my state taxes?

Every state has the right to tax income that is earned within its borders. It does not matter where you keep a home. Income is taxed at its source and a person working in 10 states will normally file 10 state income tax returns plus one for their home state. Professional sports players run into this saga each year as they can earn thousands of dollars per game in different states. This can be a daunting task and a traveler should consider hiring a tax professional well versed in multiple state situations to help them as navigating the rules can be very tricky and often the commercially available tax software companies do not work very efficiently with more than one state.

How it works

The mechanics of multiple state taxes is really easy- getting it to the forms is another story. You will be required to report all income earned in each state. You will also report worldwide income (earned anywhere, anyhow) to your home state. This sounds at first like you are double taxed, however, your home state will give you a credit for the taxes paid to the work state based on your home state’s formula for calculating tax. This can create some inequalities that will be made up on the income tax return. If your home state tax rate is very high compared to the work state, you will pay additional amounts to your home state. If the work state tax is more than your home state tax, the credit that your home state gives will wash out any tax due to your home state on that income.

How to get the forms

Almost all the tax software programs have the appropriate forms, though they are sold separately. For the do it yourselfer who is not using a tax professional or software, tax forms for each sate are readily available at websites run by state revenue agencies. The list of forms can be lengthy, but often the most common ones are at the first of the list and available in PDF format.

More to Come

In the future, I will be positing a number of articles concerning taxes for travelers so feel free to comment, ask questions or even suggest a topic that is of interest to you in this area.

History of our firm

After finishing degrees in Respiratory Therapy and Accounting, I worked as a travel Respiratory Therapist in the 1990’s and started TravelTax LLC as a hobby tax practice to serve fellow travelers. As expected, our volume of business exploded and we added more staff. In existence for over 15 years, our firm serves over 750 domestic and international mobile professionals worldwide assisting these clients with their tax filings, audits and any tax disputes they encounter. We also provide consulting services for staffing agencies as well in the area of reimbursement policy. Feel free to visit our website at www.traveltax.com for a wealth of tips and free information.

Joseph Smith EA/RRT

EA= Enrolled Agent Admitted to Practice before the IRS